Sunday, September 22, 2013

Charts 09-20: October New Moon the next candidate top

RSI on the SPX peaked with the awesome FOMC spike this week, so much so as to suggest it was the end of a wave 3, not a 5.

Diligent Elliotticians should then find the current channel and figure out where we are within it.  I would argue that we completed the (a) wave of the 4th wave correction of the W3, with (b) set for Monday, and further selling-off on Tuesday and Wednesday.

Monday's rally off Merkel's re-election should not set a new high on SPX.  It should be contained around the 1720 area, allowing for (c) of 4 to take us just below 1700, or mid-session Wednesday according to the channel as drawn.  Late this week we will have Durables and GDP, should be exciting.

A top into the SPX 1751 area would make for a decent-sized 5th wave here, about 1.618x the wave 1 from 1628.  Maybe it will even unfold as an ending diagonal, confirming our expectations of it.

SPX 09-20

BBRY may be a zero by year-end.


To my knowledge, Karl Denninger is not a registered financial advisor in the State of Florida.  If he has mislead you with his advocacy for BBRY or other benighted stocks, whether with your own or someone else's money (greets, Asimov), I am providing the link to report an Investor Complaint to the U.S. Securities and Exchange Commission for your convenience.

One more thing, I think Fred Reed's piece over at Taki's Magazine is important and should be read widely.  If you're new to Taki, whom I discovered in The American Spectator, geez, a couple of decades ago, then stick around and enjoy the rest of the site.

Good luck this week!


Permabear Doomster said...

Hmm, but WHY would we stop at the 1750s?

Bears - you, many others, and of course yours truly, have been drawing pretty charts for a few years now..and we have been WRONG.

The QE continues, and those world monthly index charts are extremely bullish. Go stare at the IBEX, the DAX, or the plain old Dow. They are all crazy strong.

As for Denniger, I think he has enough issues without the SEC on his case.

Christian Gustafson said...

it's just the next technical hurdle to cross, PD, a completed wave-count at an important area on the chart ... in October ... on a New Moon ... just like 2007 ... with shitty fundamentals and a world ready to break apart.

It's an opportunity. If we get the turn here, I think we head to SPX 570 over the next 18 months, to the support provided by the trendline between the 2002 and 2009 lows.

After that, I wager that the world currency system will get shaky, particularly via the petrodollar, or a general lack of faith in growth and the value of today's debts into the future.

When we get there, I will already be out of the dollar and into something useful and real.

It's October. The chart is ready, the rally is long-in-tooth, and everyone things we're heading higher.

I give Daneric a hard time here because he's sort of the McDonald's of (often-questionable) wave-counting, but he's been spot-on lately with his long posts about sentiment. At last we are shaping up the investor outlook into a perma-bullish Fed-guaranteed complacence. Which should ripen into a top, quite possibly THE top.

At the same time, I understand those who think we have further to go. The good Dr. McHugh's count gives us lots more time, and maybe he is right. I will be watching his work carefully in the next couple of weeks.

If this is it, and we finally roll-over up here in the ether, I personally aim to get every handle I can on the way down, to leave a scorched-earth in my wake.

The next crash is the last opportunity to profit and exit whole.

sooner said...

That stinks about Asimov

Christian Gustafson said...

Yes, Sooner, when I saw Asi's first post, I thought that he couldn't do too much damage, since he's cash-poor and usually barely able to maintain margin for a single /ES contract.

The thought of him moving on, to manage OPM, is just disturbing.

Jeff Schrader said...

Christian, what do you think interest rates/bonds do under your SPX570 scenario?

Christian Gustafson said...

Yields turn positively Japanese until the smoke clears, with the 10Y at or under 1%.

It's basically NoThing's old "priceless dollar" thesis. In a deflationary unwind, cash is king, and USTs are bought hard, until we hit the bottom and they aren't.

Then the dollar goes from priceless to worthless, very quickly, as hyperinflation hits.

There are many possible causes of the dollar collapse into true hyperinflation.

It could be Steve Ludlum's brilliant crude oil triangle, where we clear the apex of the triangle and the petrodollar standard breaks down.

It could be a moment of clarity with the industrial world's debts, ours, Japan's, the EURO bloc, where we realize these claims cannot be paid so they all default.

At SPX 570, we will probably be sitting on a crushed economy with another $T or two of debt piled on top, plus everything off-the-books.

It could involve a Tsar Bomba move from the Fed and other CBs, as they get desperate to stop the deflation.

It could be that "priceless" dollars are so precious that they are hoarded, and monetary velocity plummets to near nothing. A medium of exchange only has value if it is exchanged ...

Throw in any other number of 4th Turning type events, inter-generational war in the USA, racial tension boiling over, Leviathan getting out of hand.

One or all of these things.

The debts cannot be paid.

The debts will not be paid.

The postwar Bretton-Woods period draws to a close, and history marches on.

Shoobe Doowa said...

Landshark got banned now too. One of the few left who was educating the sheep over there of how the big picture worked.

It would be nice to get her and some the other vintage TF xers to an exiled spot like this.

Sorry Christian, should say, I've always liked your style


Shoobe Doowa said...

Oh yeah, and been lurkig since the day you fired this up. Thanks for keeping it going.

Permabear Doomster said...

re: It's an opportunity. If we get the turn here, I think we head to SPX 570 over the next 18 months, to the support provided by the trendline between the 2002 and 2009 lows.

Hmm, it'd figure if I end up going repeatedly long all the way down, lol

Oh well, one day at a time.

I have to think the 1750s will be hit though. Right now, I'd settle for 1725 by late Wednesday!

Joe said...


Let me ask you this: where does China, Japan, etc get their dollars they use to purchase US treasuries (which is a dollar-denominated ASSET)? They come from the US!!! So how in the hell do you expect foreigners to PAY US BACK in the very currency WE control?!

This is why Karl Donglicker and the rest are so bloody wrong in their entire macro analysis. They fail to understand the nature of fiat currency. We have no fixed convertible currency to gold or anything else; our debts are denominated in our own currency, not the euro, yen, etc.